Cruise line that stops here is bankrupt

American Classic blames Sept. attacks

October 20, 2001|By Gus G. Sentementes | Gus G. Sentementes,SUN STAFF

The largest U.S.-flag cruise ship company filed for bankruptcy protection yesterday and is pulling six of its seven vessels from service, including one that was serving Baltimore.

American Classic Voyages launched an East Coast route in May with the Cape May Light, which stopped in Baltimore as it cruised the Chesapeake Bay and the mid-Atlantic coast.

The company, based in Miami, blamed the bankruptcy partly on the chill in tourism caused by the Sept. 11 terrorist attacks.

In the month after the attacks, the company's gross bookings dropped 50 percent, cancellations rose 30 percent, and its cash position weakened, according to a news statement.

"The tragic events of Sept. 11 dealt a devastating blow to our business that has made it impossible to continue our full operations," Chief Executive Officer Philip C. Calian said in a statement.

The company is cutting 2,150 jobs - 450 office personnel and 1,700 ship-based workers - and closing offices in Hawaii and a recently opened reservations call center and headquarters in South Florida. It will keep 30 employees in its New Orleans office and 80 aboard the Delta Queen, a paddlewheeler that cruises inland waters.

Customers who had already made deposits or paid in cash for tickets for cruises on ships other than the Delta Queen can file for a refund with U.S. Bankruptcy Court in Wilmington, Del., the line's Web site said.

American Classic is the latest casualty in a tourism industry that was being buffeted by a souring economy even before the terrorist attacks.

In recent years, the company embarked on a shipbuilding spree in part to target what it saw as a potentially lucrative market in East Coast cruises.

In its Chapter 11 bankruptcy petition, the company listed $452.8 million in debt and $37.4 million in assets. It has not posted a profit since last year's third quarter.

One of the newer ships - the Cape May Light - is a 224-passenger vessel with 77 crew members that made its maiden voyage in May, cruising routes along the East Coast and ports in Canada.

The price for its seven-night "Charms of the Chesapeake" cruises started at $2,585 per person, according to American Classic spokeswoman Fran Sevcik.

The ship visited Baltimore six times in the spring, and was scheduled to call here five more times this fall, she said.

The East Coast route was operated by American Classic subsidiary Delta Queen Coastal Voyages, which is completely shutting down.

The Nasdaq stock market halted trading in the company Thursday afternoon.

Wire services contributed to this article.

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